United States: a possible two-year ban for algorithmic stablecoins

Although the final version is still unclear, the stablecoin bill being prepared in the United States House of Representatives would place a two-year ban on algorithmic stablecoins, but also allow banking entities and non- banks to issue stablecoins.

Source: AdobeStock/wladimir1804

According Bloomberg, the latest version of the bill would make it illegal to issue or create new “endogenously backed stablecoins”, adding that:

“The definition would come into effect for stablecoins presented as convertible, redeemable or redeemable for a fixed amount of monetary value, and which depend solely on the value of another digital asset from the same creator to maintain their fixed price.”

Not surprisingly, this latest development follows the unprecedented collapse of Terra, the protocol that powered its UST algorithmic stablecoin. In his case, the UST was supposed to maintain a 1 to 1 parity with the USD through an algorithm and trading Terra’s LUNA tokens.

In short, an algorithmic stablecoin is a cryptocurrency whose value is backed by another cryptocurrency – a system designed to maintain a stable price.

This latest bill provides for the carrying out of a study on Terra – or algorithmic – type tokens by the US treasury departmentin consultation with the Federal Reserve (EDF), theOffice of the Comptroller of the Currencythe Federal Deposit Insurance Corp. and the Securities and Exchange Commission (DRY).

In addition, the new bill would authorize banking and non-banking entities to issue stablecoins: for this, banks would need the approval of federal regulators, while the FED would be responsible for setting up a decision-making process. for requests from non-banking entities.

According to Bloomberg, citing people familiar with the matter, it is uncertain whether Patrick McHenry (Republican), a member of the House of Representatives Financial Services Committee, has endorsed the latter draft, although he has been working on stablecoin regulations with Maxine Waters (Democrat), Chair of the House Financial Services Committee.

In addition to the stablecoin-related aspects, the legislation would require the FED to study the economic impact of a digital dollar, and it would prohibit companies from mixing customer funds – including stablecoins, private keys and cash. liquid – with the assets of the company.

It is important to note that the terms of the proposal could change before the final version is unveiled. However, the time to review the proposal is shrinking as the midterm elections approach. Therefore, the vote on the bill could take place as early as next week, people familiar with the matter said.

Follow our affiliate links:

  • To buy cryptocurrencies in the SEPA Zone, Europe and French citizensvisit Coinhouse
  • To buy cryptocurrency in Canadavisit bitbuy
  • To generate interest with your bitcoinsgo to the website of BlockFi
  • To secure or store your cryptocurrenciesget the wallets ledger Where Trezor
  • To trade your cryptos anonymouslyinstall the app NordVPN

To invest in cryptocurrency mining or masternodes:

To accumulate coins while playing:

  • In poker on the gaming platform CoinPoker
  • To a global fantasy football on the platform Sorare

Stay informed with our free weekly newsletter and to our social networks:

We wish to say thanks to the writer of this post for this amazing material

United States: a possible two-year ban for algorithmic stablecoins


Check out our social media accounts and also other related pageshttps://metfabtech.com/related-pages/